Nabucco Future Hangs in the Balance

The scheme to ship more than 30 billion cubic meters of gas per year from the Caspian and beyond to Europe, bolstering Europe's energy security, may founder following Turkey's decision to allow Russia's rival South Stream project to run through its Black Sea waters. Construction of the 63 billion cubic meters (bcm) per year pipeline is planned to start by the end of this year.

Turkey also signed a deal with Azerbaijan to build the Trans-Anatolia Pipeline (TANAP) to carry 10 bcm per year of Azeri gas to European markets, plus 6 bcm for itself, casting further doubt on Nabucco which is having difficulty getting commitments of gas supplies.

Nabucco was to run some 3,900 kilometres (2,400 miles) across Turkey then up through Bulgaria, Romania and Hungary to reach Austria where it would link up with a major distribution network.

"The Nabucco project was in a coma long before the South Stream agreement, but nobody dares to say Nabucco is already dead."

"Turkey was not completely onboard on Nabucco," said Andrew Neff, senior energy analyst at IHS Global Insight, adding: "Turkey sees itself as a power arbitrator."

"Nabucco has been an incomplete project since the very beginning," said Mete Goknel, former director of Turkey's state-owned pipeline company, Botas, which is one of the Nabucco consortium partners. "Who will ship the gas through the pipeline?"

Central Asia is Moscow's backyard and Russia's Gazprom has most supply tied up, while sourcing from Iraq's northern Kurdistan region is fraught given the political frictions with the central government in Baghdad.